Research in Motion (RIMM)
In an interesting coincidence, Research in Motion announced their first quarter results yesterday, on the same day as Apple (AAPL: Charts, News, Offers) retail stores started selling their new iPhone 4. Over the past few years, Research in Motion has been fighting hard to remain competitive, as Apple iPhones have dominated the market, and as Google (GOOG: Charts, News, Offers) Android phones have begun to rise in popularity. Although the company has managed to stay alive, are there warning signs that the end is drawing near for this smartphone company, or is Research in Motion going to be able to remain a worthy competitor?
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Stock Analysis
Research in Motion actually posted relatively strong results for the first quarter, given their circumstances. Although some of their results fell on the lower end of expectations, the company still remained on target with a strong improvement from the year before. RIM saw profit rise from $643 million to $769 million, and revenue rose 24% to $4.24 billion. The company also shipped 11.2 million BlackBerry devices, and gained 4.9 million wireless subscribers. This was a 43% increase in devices from the year before, and a record quarter for Research in Motion. Despite the record sales, a few major points concerned investors and analysts. First, revenue was a bit below expectations (analysts were hoping for $4.35 billion). Also, although the company shipped more devices, the average selling price per device slipped from $311 last quarter to $299 this quarter.
The biggest concern is the competition from other smartphone companies. The popularity of the new iPhone model is no secret, as the company is said to have taken 600,000 orders on the first day preorders were available, and many more are expected to come in. The iPhone and Android system have already pushed out other competitors, such as Palm (PALM: Charts, News, Offers) and Nokia (NOK: Charts, News, Offers). BlackBerry has remained popular so far, especially in the business sector, and hopes that its new software and devices that it will release in the upcoming months will help sales continue to grow. The company has predicted device shipments for next month between 11.6 and 12.1 million. Analysts seem uncertain about these predictions, although some experts are anticipating a new device to be released with a touch screen and a slide-out keyboard (currently unconfirmed by RIM), which some believe could rival the iPhone.
Research in Motion seems to be doing everything it can. It is staying strong financially, meeting expectations, and announcing a 31 million share buyback this upcoming year. And it has also announced an upcoming release on new software and new devices. However, the company’s stock has fallen 20% the past few months, and has been losing market share for over a year. The prevailing attitude seems to be that RIM’s only possible chance of success is tied to the new devices that will soon be released, and even that is no guarantee; but unless these are a huge hit and offer features as good as if not better than those offered on the iPhone and other devices, then Research in Motion’s chances of recapturing market share seem slim to none.
Research in Motion Commentary:
- RIM Can’t Touch Tablets Without Spending Big Bucks – One of the widespread rumors is that RIM will be releasing a tablet device to compete with Apple’s iPad.
- RIM Tries to Lure Wary Developers to Its App Store – Currently, BlackBerry’s app store is no match for Apple’s, but RIM would like to change that.
- Motorola, RIM Settle Patent Fight Over Mobile Phones – The long fight is over, as RIM agreed to a payout to use certain Motorola (MOT: Charts, News, Offers) patents.
More Stocks in the News:
- KB Home loss wider than expected – KB Home (KBH: Charts, News, Offers) saw its first increase in home deliveries in over three years, but still saw a loss which was greater than expectations.
- YouTube wins Viacom case, we lose entertainment – Google’s (GOOG: Charts, News, Offers) YouTube and Viacom (VIA: Charts, News, Offers) both were accusing each other off some odd behaviors, but it looks like Google has won for now.
- Oracle Rises After Sun Acquisition Fuels Profit Gain – Oracle (ORCL: Charts, News, Offers) beat expectations, especially helped by their purchase of Sun Microsystems earlier this year.
